Bank Indonesia surprises markets with aggressive rate hike
Markets had expected the central bank to opt for a smaller move in the policy rate
Bank Indonesia has decided to raise its benchmark interest rate by a higher-than-expected 50 basis points and rolled out three macro-prudential policies in an attempt to stem local currency weakness while spurring growth.
The seven-day reserve repo rate is now 5.25%, up from 4.75%, after the two-day policy meeting ended today (June 29). Although a hike was widely expected, most analysts predicted a 25bp increase.
“The [rate hike] is Bank Indonesia’s pre-emptive, front-loading and ahead-of-the
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